Wi-fi signals were beamed from another part of New Zealand to the 15-metre-diameter balloons, and then to the homes of about 50 trial participants.

Google says the participants were then able to successfully link to the internet.

While still in the early stages, Project Loon leader Richard DeVaul says the technology could increase internet access to countries such as Africa, and in South-East Asia.

"About 4.8 billion people don't have the internet right now," he said.

"Some of them are living in remote places, but some of them are actually living right here in New Zealand, and we think that Project Loon can play a big role in connecting many of those unconnected people."

Project Loon works by ground stations connecting to the local internet infrastructure and beaming signals to the balloons, which are self-powered by solar panels.

The balloons, which once in the stratosphere will be twice as high as commercial airliners and barely visible to the naked eye, are then able to communicate with each other, forming a mesh network in the sky.

Users below have internet antennae they attach to the side of their house which can send and receive data signals from the balloons passing overhead.

Google's ultimate goal is to have a ring of balloons circling the Earth, ensuring there is no part of the globe that cannot access the internet.

It has not said how much it is investing in the project.

"The idea may sound a bit crazy - and that's part of the reason we're calling it Project Loon - but there's solid science behind it,'' Google said in a statement.

How does it work?

Ground stations connect to the local internet infrastructure.

They beam signals to the balloons, which are self-powered by solar panels.

The balloons are then able to communicate with each other.

They form a mesh network in the sky.

Users below have internet antennae they attach to the side of their house.

The antennae can send and receive data signals from the balloons passing overhead.

"Balloons, carried by the wind at altitudes twice as high as commercial planes, can beam Internet access to the ground at speeds similar to today's 3G networks or faster.

"It is very early days, but we think a ring of balloons, flying around the globe on the stratospheric winds, might be a way to provide affordable Internet access to rural, remote, and underserved areas down on earth below, or help after disasters, when existing communication infrastructure is affected."

Project Loon has been in development since mid-2011 by scientists at the Google X research lab, which has previously produced a driverless car and the Google Glass augmented reality spectacles.

The design lab plans to trial the internet balloons, which can stay in the air for up to 100 days, in Australia by mid-2014.

The Southern Hemisphere, specifically the 40th parallel south, has been chosen for the trial partly because of the stratospheric conditions, with the balloon's movements controlled from the ground by harnessing winds and solar power.

The only part of Australia on the 40th parallel is north Tasmania - so that appears the likely destination for the Australian trial.